Complex a hit in Annapolis

Businesses quickly snatching spots as Park Place plans to open first phase in spring

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December 15, 2006|By Joe Palazzolo | Joe Palazzolo,Special to The Sun

With the addition of four tenants, available space at the $250 million Park Place complex is filling quickly before the first phase opens next spring -- proof of demand for commercial space in Annapolis, city officials say.

Jerome J. Parks Cos., the developer, announced last week that Morton's The Steakhouse would open early next summer in the Westin Hotel under construction at the site at West Street and Taylor Avenue.

It follows four major companies that have recently signed on -- including Merrill Lynch and biotechnology firm PharmAthene -- seven retailers and more than 100 homebuyers.

Across the street, the new five-story Severn Savings Bank building is also popular. All 82,000 square feet of office and retail space, slated to open by the end of the year, have been fully leased.

"It's a major coup for [the developers]," said Mike Miron, Annapolis economic development director. "They certainly hit the right part of the market. Space here is tight."

In the third quarter of 2006, the city had a 5.29 percent vacancy rate of office space, among the lowest in the state. Baltimore, by comparison, posted a 13.82 percent vacancy rate, according to a study by MacKenzie Commercial Real Estate Services LLC, a Lutherville-based consulting firm.

Park Place is offering 250,000 square feet of office space, unfolding within two five-story buildings connected by a glass skywalk. The developer has leased 38 percent of the first building and is marketing the second, which is still under construction.

The development will include 208 condominiums, 37,000 square feet of retail and restaurants, the Westin and a 1,500-space parking garage. About 65 percent of the condos -- each costing from $500,000 to $2 million -- are sold, and 57 percent of the retail space is spoken for.

Starbucks, Aveda Day Spa and an Italian restaurant stand out on a list of signed tenants.

Much of the office space is going to companies in the area looking for more room, said Kris Warner, a spokeswoman for Park Place.

"There is virtually no Class A office space in Annapolis. All the companies that we've leased to are within Anne Arundel County. They were looking for room, but not a lot of buildings around here have it to offer," Warner said.

PharmAthene, for example, is moving from the Chesapeake Innovation Center business incubator in Parole, while Building Owners and Management Institute in Arnold signed a lease at Park Place in October for 12,500 square feet

Sherry Hewitt, the chief operating officer, said management at the firm, which educates commercial property professionals, wanted to raise its profile as the company expanded. The list of potential new locations in the area was short.

"Honestly, there's not a lot of open space around here, but we were definitely looking for a Class A building," Hewitt said. "[Park Place] was the only option at the time, but we're very pleased."

Richard Crabtree, Annapolis branch manager for Merrill Lynch, which recently penned a deal for 15,000 square feet at Park Place, said the office at 60 West St. is beyond capacity. The trading staff has nearly doubled to 35 brokers in the past decade, and the company will add 10 more employees once it relocates to Park Place, Crabtree said.

"We're just moving down the street because we think that's where a lot of the growth will be, and just from a standpoint of size our office was no longer fitting our needs," he said.

Like Hewitt, Crabtree said Park Place's affluence and bustle will benefit his employees and cater to the company's clientele.

"We wanted Class A real estate, and this is the nicest real estate in town," Crabtree said.